SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Date of Report (earliest event reported): March 2, 2005
NEWTEK BUSINESS SERVICES, INC.
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(Exact name of issuer as specified in its charter)
New York 001-16123 11-504638
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(State or other jurisdiction of (Commission file (I.R.S. Employer
incorporation or organization) number) Identification No.)
100 Quentin Roosevelt Blvd., Garden City, NY 11530
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (516) 390-2260
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Newtek Capital, Inc.
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(Former Name)
FORWARD-LOOKING STATEMENTS
This current Form 8-K contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. The words "believe," "will be
able," "anticipate," "estimate," "project," "should," "will," "expect,"
"continue," "intend" or similar words are intended to identify forward-looking
statements. Such statements involve risks and uncertainties that exist in the
operations and business environment of Newtek Business Services, Inc., that
could render actual outcomes and results materially different than expected or
predicted. Our forward-looking statements are based on assumptions about many
factors, including, but not limited to: changes in interest rates or the general
economy of the markets in which we operate; economic, technological or
regulatory changes affecting the businesses conducted and to be conducted by us;
our ability to employ and retain qualified employees; changes in government
regulations that are applicable to our regulated small business lending; our
ability to identify and complete acquisitions and successfully integrate the
businesses we acquire; changes in the demand for our services; the degree and
nature of competition; and general volatility of the capital markets and the
market price of our common stock. While we believe that our assumptions are
reasonable at the time forward-looking statements were made, we caution that it
is impossible to predict the actual outcome of numerous factors and, therefore,
readers should not place undue reliance on such statements. Forward-looking
statements speak only as of the date they are made and we undertake no
obligation to update such statements in light of new information or otherwise.
ITEM 12 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On March 2, 2005 Newtek Business Services, Inc. issued a press release
concerning the results of its operations for the year ended December 31, 2004.
For the year, it reported gross revenue of $70.1 million and net earnings of
$0.35 per diluted share. Pursuant to the requirements of Item 12 of Form 8-K,
Newtek has furnished this press release by attaching a copy as Exhibit 99.1,
hereto.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NEWTEK BUSINESS SERVICES, INC.
Date: March 2, 2005 /s/ Barry Sloane
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Barry Sloane
Chairman of the Board, Chief
Executive Officer and
[NEWTEK BUSINESS SERVICES LOGO]
FOR IMMEDIATE RELEASE
NEWTEK BUSINESS SERVICES REPORTS RECORD REVENUE & NET INCOME FOR 2004
Beats Street EPS Consensus by $.03/Share
NEW YORK, N.Y. - MARCH 2, 2005 - Newtek Business Services, Inc. (NASDAQ: NKBS)
www.newtekbusinessservices.com), a provider of business services and financial
products to the small to medium-sized business market, today announced earnings
of $0.35 per diluted share for the year ended December 31, 2004, compared to
$0.37 per diluted share in 2003. After tax net income increased from $9.6
million in 2003 to $10.6 million in 2004. Excluding extraordinary gains, the
company earned $0.35 per diluted share for the year ended December 31, 2004,
compared to $0.36 per diluted share in 2003. Revenue for the year increased
15.9% to $70.1 million from $60.5 million in the prior year. The decline in EPS
was caused by the sale of 6.45 million shares through a registered stock
offering.
Barry Sloane, chairman and CEO, stated, "Revenues increased by 15.9% from 2003
to 2004 with revenues in our underlying business segments also growing strongly.
Merchant services and small business lending revenues both grew by 204%, and
40%. Web hosting, small business finance and merchant services earned pre tax
net income of $2.1 million, $2.6 million and $1.2 million respectively, up from
a loss of $169,000 the year prior. Newtek's reported EPS of $.35 per share
exceeding Wall Street consensus EPS estimate of $.32 per share by 9%.
Putting aside the financial success, we are most satisfied with the progress of
our underlying businesses. We are at the beginning of our business model and do
not believe we are close to displaying our potential. This growth has created a
smooth transition into our business model as a direct distributor of business
services and financial products into the small to medium-sized business market.
Using SBA estimates and demographics, we believe this market is 23 million
clients and growing. We look forward to developing our brand beyond its existing
45,000 small to medium-sized business clients."
The company will discuss its results in more detail, including guidance for
2005, during its shareholder conference call this afternoon at 4:10 EST, which
is accessible by dialing 1-800-659-2037 and providing the pass code 61536308.
Listeners are encouraged to ask any questions that they may have during the
call. The conference call will also be broadcasted over the Internet through
Newtek's website at www.newtekbusinessservices.com. To listen to the webcast
live, please go to Newtek's website approximately 15 minutes prior to the call
to download any audio software which may be necessary. For those who miss the
live broadcast, a replay will be available on the website approximately one hour
after the call.
ABOUT NEWTEK BUSINESS SERVICES, INC.
Newtek Business Services, Inc. is a premier provider of business services and
financial products to the small to medium-sized business market. Newtek's core
brands are:
o NEWTEK SMALL BUSINESS FINANCE: U.S. government-guaranteed small business
lending services;
o NEWTEK MERCHANT SOLUTIONS: electronic merchant payment processing solutions;
o NEWTEK INSURANCE AGENCY: customized insurance products provided through
Keyosk;
o NEWTEK IT SERVICES: complete information technology solutions;
o CRYSTALTECH WEB HOSTING: comprehensive web site services;
o NEWTEK FINANCIAL INFORMATION SYSTEMS: outsourced digital bookkeeping; and
o NEWTEK TAX SERVICES: tax filing, preparation and advisory services.
THE STATEMENTS IN THIS RELEASE MAY CONTAIN FORWARD LOOKING STATEMENTS RELATING
TO SUCH MATTERS AS ANTICIPATED FUTURE BUSINESS STRATEGIES AND FINANCIAL
PERFORMANCE, ANTICIPATED FUTURE NUMBER OF CUSTOMERS, BUSINESS PROSPECTS,
LEGISLATIVE DEVELOPMENTS AND SIMILAR MATTERS. THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 PROVIDES A SAFE HARBOR FOR FORWARD LOOKING STATEMENTS. IN
ORDER TO COMPLY WITH THE TERMS OF THE SAFE HARBOR, NEWTEK BUSINESS SERVICES,
INC. NOTES THAT A VARIETY OF FACTORS COULD CAUSE ITS ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE ANTICIPATED RESULTS EXPRESSED IN THE COMPANY'S FORWARD
LOOKING STATEMENTS SUCH AS INTENSIFIED COMPETITION AND/OR OPERATING PROBLEMS AND
THEIR IMPACT ON REVENUES AND PROFIT MARGINS OR ADDITIONAL FACTORS AS DESCRIBED
IN NEWTEK BUSINESS SERVICES' 2003 ANNUAL REPORT ON FORM 10-K AND SUBSEQUENTLY
FILED REGISTRATION STATEMENTS.
CONTACTS:
Newtek Business Services
Barry Sloane
Chairman of the Board & CEO
212-356-9500
bsloane@newtekbusinessservices.com
Dave Gentry
Aurelius Consulting Group, Inc.
407-644-4256
dave@aurcg.com
2
NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
DECEMBER 31, DECEMBER 31,
2004 2003
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ASSETS
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Cash and cash equivalents $ 50,921,982 $ 33,444,611
Restricted cash 2,181,675 2,107,471
Credits in lieu of cash 88,883,335 71,294,083
SBA loans receivable, net of reserve for loan losses 34,186,047 52,050,725
Accounts receivable (net of allowances of $72,062 and $96,480, respectively) 1,561,252 469,768
Receivable from bank 1,799,537 2,670,353
SBA loans held for sale 2,262,035 3,619,582
Accrued interest receivable 375,411 281,072
Investments in qualified businesses - equity method investments 300,000 300,000
Investments in qualified businesses - held to maturity investments 2,909,097 1,420,179
Structured insurance product 3,216,112 3,054,705
Prepaid insurance 15,505,326 13,282,630
Prepaid expenses and other assets (net of accumulated amortization of
deferred financing costs and other intangibles of $404,105 and $0,
respectively) 4,708,865 1,907,132
Capitalized servicing assets (net of accumulated amortization of
$486,799 and $24,545, respectively) 2,084,763 754,064
Furniture, fixtures and equipment (net of accumulated depreciation of
$1,025,672 and $390,011, respectively) 1,958,927 670,715
Customer merchant accounts (net of accumulated amortization of $1,226,741
and $269,380, respectively) 3,850,776 3,024,298
Goodwill 11,692,776 1,832,621
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Total assets $ 228,397,916 $ 192,184,009
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Liabilities:
Accounts payable and accrued expenses $ 9,788,804 $ 6,095,440
Notes payable - certified investors 3,823,434 3,829,973
Notes payable - insurance 7,877,195 4,115,136
Notes payable - other 520,000 1,000,000
Bank notes payable 27,987,696 51,990,047
Deferred revenue 1,160,286 --
Notes payable in credits in lieu of cash 76,360,830 65,697,050
Mandatorily redeemable preferred stock 1,500,000 --
Deferred tax liability 16,626,577 10,815,790
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Total liabilities 145,644,822 143,543,436
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Minority interest 5,720,950 8,393,151
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Commitments and contingencies
Shareholders' equity:
Preferred stock (par value $0.02 per share; authorized 1,000,000 shares,
no shares issued and outstanding -- --
Common stock (par value $0.02 per share; authorized 39,000,000 shares,
issued and outstanding 33,873,333 and 26,209,211, not including 582,980
shares held in escrow) 677,467 524,184
Additional paid-in capital 52,858,400 26,588,400
Unearned compensation (2,297,459) (2,106,588)
Retained earnings 25,793,736 15,241,426
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Total shareholders' equity 77,032,144 40,247,422
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Total liabilities and shareholders' equity $ 228,397,916 $ 192,184,009
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3
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002
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Revenue:
Income from tax credits $ 33,564,626 $ 44,933,405 $ 30,603,046
Electronic payment processing 19,141,434 6,297,246 1,584,476
Servicing fee and premium income 5,981,576 2,701,842 --
Web hosting 4,428,141 -- --
Insurance commissions 559,450 -- --
Interest and dividend income 3,834,194 4,059,321 900,127
Other income 2,582,400 2,500,986 1,581,978
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Total revenue 70,091,821 60,492,800 34,669,627
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Expenses:
Interest 14,039,315 13,878,956 11,485,367
Payroll and consulting fees 10,842,688 8,407,347 4,564,954
Electronic payment processing costs 12,036,282 3,684,962 632,024
Professional fees 5,988,223 5,327,789 3,145,246
Insurance 2,818,307 2,468,835 1,951,248
Other than temporary decline in value of
investments -- 1,996,040 1,602,365
Equity in net losses of affiliates -- -- 729,109
Provision for loan losses 205,022 473,418 --
Goodwill impairment -- 1,435,232 --
Depreciation and amortization 2,459,381 504,175 147,681
Other 5,511,274 4,246,309 2,893,657
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Total expenses 53,900,492 42,423,063 27,151,651
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Income before minority interest, provision
for income taxes and extraordinary items 16,191,329 18,069,737 7,517,976
Minority interest 890,352 (1,598,040) (335,324)
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Income before provision for income taxes and
extraordinary items 17,081,681 16,471,697 7,182,652
Provision for income taxes (6,529,371) (7,089,639) (2,657,410)
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Income before extraordinary items 10,552,310 9,382,058 4,525,242
Extraordinary gain on acquisition of minority
interests -- -- 907,766
Extraordinary gain on acquisition of a business -- 186,729 2,735,243
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Net income $ 10,552,310 $ 9,568,787 $ 8,168,251
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Weighted average common shares outstanding
Basic 30,067,737 25,777,147 24,183,501
Diluted 30,378,697 26,177,274 24,293,540
Income per share after extraordinary gain
Basic $ .35 $ .37 $ .34
Diluted $ .35 $ .37 $ .34
Income per share before extraordinary gain
Basic $ .35 $ .36 $ .19
Diluted $ .35 $ .36 $ .19
4
NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES
SEGMENT FOOTNOTE
FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2004 2003 2002
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Revenue
SBA Lending $ 10,337,820 $ 7,390,079 $ --
Electronic payment processing 19,141,434 6,297,246 1,584,476
Web hosting 4,428,141 -- --
Capco & other 36,184,426 46,805,475 33,115,151
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Total $ 70,091,821 $ 60,492,800 $ 34,669,627
Income (loss) before provision for
income taxes and extraordinary
items
SBA Lending $ 2,615,650 $ 751,287 $ --
Electronic payment processing 1,238,578 (920,469) (1,258,665)
Web hosting 2,077,394 -- --
Capco & other 11,150,059 16,640,879 8,441,317
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Total $ 17,081,681 $ 16,471,697 $ 7,182,652
Depreciation and Amortization
SBA Lending $ 836,682 $ 50,740 $ --
Electronic payment processing 705,036 312,836 58,299
Web hosting 587,006 -- --
Capco & other 330,657 140,599 89,382
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Total $ 2,459,381 $ 504,175 $ 147,681
INTERCOMPANY Revenue eliminated above
SBA Lending $ -- $ -- $ --
Electronic payment processing 805,591 485,633 86,092
Web hosting -- -- --
Capco & other 2,223,626 1,551,503 1,157,655
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Total $ 3,029,217 $ 2,037,136 $ 1,243,747
INTERCOMPANY Expenses eliminated above
SBA Lending $ 889,674 $ 256,320 $ --
Electronic payment processing 1,349,069 950,874 495,159
Web hosting -- -- --
Capco & other 790,474 709,459 748,588
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Total $ 3,029,217 $ 1,916,653 $ 1,243,747
AT DECEMBER 31, AT DECEMBER 31, AT DECEMBER 31,
2004 2003 2002
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Identifiable Assets
SBA Lending $ 48,839,937 $ 64,738,750 $ --
Electronic payment processing 3,507,162 7,308,940 5,119,864
Web hosting 12,367,893 -- --
Capco & other 163,682,924 120,136,319 163,934,874
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TOTAL $ 228,397,916 $ 192,184,009 $ 169,054,738
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